Key Indexes End Higher After an Initial Sell-Off
Bargain hunters helped push major stock market indexes into positive territory by the end of trading Thursday, after an early sell-off that drove the Nasdaq composite to a new 2004 low.
The rebound raised some analysts’ hopes that the latest market downturn might be nearly finished.
The technology-dominated Nasdaq index, which had tumbled 2.2% on Wednesday to its lowest close since Oct. 24, dropped 1.1% in early trading Thursday, reaching 1,853.58.
Buyers then took control, driving the index mostly higher for the rest of the session. It ended at 1,889.06, up 14.69 points, or 0.8%.
The Dow Jones industrial average fell as low as 9,946.88, then rallied to close at 10,050.33, up 4.20 points, or less than 0.1%.
Stocks have been hammered since the second half began amid concerns about corporate earnings growth, interest rates and high energy prices.
Many companies have reported strong earnings for the second quarter, but forecasts for the rest of the year have been less optimistic than investors had hoped.
That was the case with Microsoft, which reported results after regular trading ended Thursday.
As stocks have slumped this week, major indexes have reached levels that were expected to attract buyers, albeit for reasons that might be purely technical: The market’s spring sell-off ended in mid-May at about these same levels.
The Standard & Poor’s 500 index rallied Thursday after it fell to 1,084.16. That was almost exactly the index’s 2004 closing low reached May 17. The S&P; finished up 2.96 points, or 0.3%, at 1,096.84.
Still, declining stocks outnumbered advancing issues by about 3 to 2 on the New York Stock Exchange and on Nasdaq, in active trading.
“The market is basically testing the trading ranges,” said Peter Cardillo, chief strategist with S.W. Bach & Co.
Earnings reports are likely to continue to dominate the market action for the next week, analysts say.
Beyond that, “I wouldn’t expect we’re going to see huge moves to the upside until we get the [presidential] election behind us,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach.
Energy remains a big concern: Near-term oil futures in New York rose 78 cents to $41.36 a barrel on Thursday amid rising concerns about supplies.
Russia’s Yukos Oil warned that it faced an imminent threat of bankruptcy, which could disrupt its foreign sales of oil.
Among the day’s market highlights:
* Stocks gaining ground on earnings reports included home builder Ryland, up $4.79 to $74.16; casino giant MGM Mirage, up $2.17 to $45.25; and wireless technology leader Qualcomm, which jumped $4.82 to $72.50.
Also, Starbucks surged $2.12 to a record $47.76 after reporting a 44% jump in quarterly profit.
* On the downside, heavy-machinery maker Caterpillar lost $3.42 to $73.53. The company said second-quarter net income was $1.55 a share, missing analysts’ average estimate of $1.74, in part because of higher steel and shipping costs.
* Retailer Sports Authority tumbled $5.08 to $25.37 after warning of lower earnings in the current quarter, which ends July 31. It blamed poor weather in parts of the nation.
* In the battered tech sector, Intel gained 71 cents to $23.27, Cisco Systems rose 22 cents to $21.39 and Motorola was up 74 cents to $15.61.
* The Internet sector rebounded. EBay fell as low as $71.45 after its earnings report late Wednesday disappointed some investors. But the stock snapped back to $77.39 by the close, up 79 cents.
Also in the Net sector, Yahoo rose $1.13 to $29.26 and InfoSpace gained $1.41 to $29.41.
* Real estate investment trusts were sharply lower. Mack Cali fell $1.06 to $40.63, Vornado Realty slid $1.43 to $58.10 and Kimco Realty dropped $1.09 to $47.35. REIT shares had been relatively strong in recent weeks.
